*1314 Petitioner in 1923 created a trust for the benefit of herself and the children of her husband (her stepchildren) making him trustee in the trust instrument and providing therein that should she predecease him, he might cancel and terminate the trust and receive as his own the corpus of the trust fund and any undistributed income. She reserved to herself the right, in conjunction with him, to revoke the trust. In the event he predeceased her, the trust was then to become irrevocable and unalterable. Held, (he being still alive) that the trust was revocable and in computing her net income for the years 1924 and 1925, the income therefrom should, under section 219(g) of the Revenue Acts of 1924 and 1926, be included.
*390 The respondent determined deficiencies in income tax for the years 1924 and 1925, in the respective amounts of $2,822.25 and $3,051.13. Both amounts are in controversy.
The issue raised is whether or not the trust created by the petitioner and involved herein is revocable. *1315 The respondent so determined and computed the tax accordingly. The facts are stipulated.
FINDINGS OF FACT.
The petitioner, Iola W. Stetson, is a resident of New York, N.Y.
The deficiency notice was mailed to her October 26, 1928, and her petition to this Board was thereafter duly filed.
*391 On December 29, 1923, she executed a trust agreement with her husband, Eugene W. Stetson, under which two thousand shares of the capital stock of the Bibb Manufacturing Company of Macon, Georgia, of the par value of $100 each, were transferred by her to him, and such other person or corporation as he might designate, as trustees, to hold said property in trust for the equal benefit of the grantor, petitioner, and her four stepchildren hereinafter named, and for other uses and purposes therein specified, upon certain contingencies not material to be here stated.
The trust instrument provided that the trust should continue so long as the grantor and her stepchildren, Leonice Josephine Stetson, Eugene William Stetson, Jr., Basil Wise Stetson and Charles Pate Stetson (the children of grantor's husband), should live or until the earlier termination of the trust by virtue of certain*1316 provisions therein not important to be here stated. It also provided, "no individual acting as trustee shall be entitled to any compensation." This trust agreement further provided:
During the lifetime of EUGENE W. STETSON, the husband of the Grantor, and with his consent, the Grantor expressly reserves the right to revoke, cancel and annul this agreement, or to amend, alter or modify it, in whole or in part, from time to time, by an instrument in writing, duly executed and acknowledged by her said husband and herself. In case the said EUGENE W. STETSON, husband of the Grantor, shall predecease her, this agreement shall be irrevocable and unalterable, but in case the Grantor shall predecease her said husband, EUGENE W. STETSON, he may cancel and terminate this agreement by an instrument, in writing, duly executed and acknowledged, and filed with the Trustee or Trustees then acting, and upon such termination and cancellation, the said husband shall be entitled to receive the corpus of the trust fund and any undistributed income, to hold and dispose of absolutely for his own use.
On the same day the petitioner executed the trust agreement heretofore described, Eugene W, Stetson, *1317 her husband, executed a somewhat similar trust agreement with her as trustee, under which he placed with her in trust policies of insurance on his life aggregating approximately $400,000, for her benefit and the benefit of his said four children, which trust was to continue so long as any of them lived. By paragraph 9 of said trust it was provided:
The Trustee shall in no way be bound to pay any premiums upon any policies of insurance at any time held subject to the trust or to keep said policies of insurance in force, except insofar as the Trustee shall have received, and then hold, cash or securities furnished to the Trustee for that purpose. If any premiums on any of the said policies of insurance shall not have been paid when due, and the Trustee shall not have received from any of the beneficiaries of the trust sufficient sums to enable her to, pay any premium on any policies of insurance then due and payable, the Trustee may *392 use any cash then subject to this trust, whether principal or income, or may sell or dispose of any securities then constituting a part of the trust fund and may use the proceeds thereof, for the payment of any such premiums. The trustee*1318 shall have the right to use any of the said policies of insurance for the purpose of borrowing any sums which may be necessary to pay such premiums, but the Trustee shall not be required so to do unless she shall have received the written request, either of the Grantor or of a beneficiary, so to do at least ten (10) days before any policy would lapse by reason of the non-payments of the premium due and payable thereon.
The said trust agreement transferred all of grantor's interest in said policies, except that he reserved "the right to receive personally all disability benefits payable by the insurance companies under any policies now or hereafter forming a portion of the trust and it is agreed that any such benefits shall be paid to him direct by the insurance companies." There were no securities, cash or property of any kind, except insurance policies, shown to have been transferred in said trust agreement. Both trust agreements by their terms provided they should be construed in accordance with the laws of Connecticut and also provided that the trustee named in each of the trust instruments might by an instrument in writing duly acknowledged appoint a trust company incorporated*1319 in the State of Connecticut or the State of New York to act as associate trustee. On the date said trust agreements were executed, petitioner duly appointed the Guaranty Trust Company of New York to act as associate trustee with her in the trust in which her husband was the grantor. The Guaranty Trust Company on January 7, 1924, accepted the appointment and agreed to act as trustee aforesaid.
On February 14, 1924, petitioner directed the Guaranty Trust Company of New York (which is also treated by both parties as the duly appointed and qualified associate and active trustee under her trust agreement with her husband) to pay the premiums on the policies of insurance transferred by her husband to her from the income of the trust created by her. Her authority for such direction was based on paragraph 5 of her trust agreement with her husband and is as follows:
Prior to the death of EUGENE W. STETSON, husband of the Grantor, the net income of the trust shall in each year, at such time as the Trustee may determine, be divided into and distributed in equal shares so that there shall be one equal share for the grantor, and one such equal share for the descendants, collectively, of*1320 any deceased child, who shall have left a descendant surviving at such time, such descendants to take their parent's share per stirpes and not per capita. The share allotted to any child, who at the time of such distribution of income, shall be under the age of twenty-one (21) years, shall be paid or applied, in whole or in part, by the Trustee to the use, support, education and maintenance of such child, and may at the discretion *393 of the Grantor, or if she be dead, in the discretion of my said Trustee, be applied, in whole or in part, toward the payment of any premiums on policies of insurance upon the life of the Grantor's husband, EUGENE W. STETSON, in which such child shall have a beneficial interest.
During 1924 petitioner turned over to the Guaranty Trust Company of New York, trustee, with which to make payments of preminums as aforesaid, the sum of $4,000, being the dividend received by her on the Bibb Manufacturing Company stock on January 1, 1924, and the said Guaranty Trust Company collected direct in 1924 from the Bibb Manufacturing Company dividends in the amount of $12,000. Of the amount so received, approximately $6,700 was applied to payment of premiums*1321 on the policies of insurance on the life of petitioner's husband, Eugene W. Stetson.
In 1925 there was received direct from the Bibb Manufacturing Company as dividends the sum of $16,000, of which approximately $12,000 was applied by the trustee to the payment of the premiums on the before-mentioned insurance policies.
The respondent determined that the entire income derived from dividends is taxable to the petitioner and that the trust from which same was derived is revocable. From such determination petitioner appealed and filed her petitioner herein, contending that the dividends received in the taxable years were income equally to petitioner and her four stepchildren, as beneficiaries of the trust, and any tax on such income should be borne equally by each.
OPINION.
SEAWELL: The issue here presented is whether the income from the trust created by the petitioner is taxable solely to her, as determined by the respondent, or is taxable equally to her and her four stepchildren, as contended by petitioner.
The applicable law is found in section 219(g) of the Revenue Acts of 1924 and 1926 and is as follows:
Where the grantor of a trust has, at any time during the taxable*1322 year, either alone or in conjunction with any person not a beneficiary of the trust, the power to revest in himself title to any part of the corpus of the trust, then the income of such part of the trust for such taxable year shall be included in computing the net income of the grantor.
In behalf of the petitioner it is insisted that her husband, made trustee under the trust which she created, is also a beneficiary thereunder, within the meaning of the section of the law quoted and that, if such a beneficiary, the trust was irrevocable and the respondent erred in treating it as revocable and taxing the entire income to *394 petitioner. The trust instrument in which petitioner made her husband trustee provided that during his lifetime, and with his consent, she expressly reserved the right to revoke, cancel, annul, amend, alter or modify the same, in whole or in part, from time to time, by an instrument in writing, duly executed an acknowledged by both, and it was further provided therein that should her husband predecease her the trust agreement "shall be irrevocable and unalterable," but that should she predecease him he might cancel and terminate the said agreement by*1323 an instrument in writing, duly executed and acknowledged and filed with the trustee or trustees then acting and that he would then be entitled to receive absolutely as his own the corpus of the trust fund and any undistributed income. It was only upon her death occurring before his that he would be entitled to receive as a beneficiary of the trust the corpus of the trust or the undistributed income therefrom. During the taxable years involved he was not, under the terms of the trust, entitled to receive any part of the corpus or income therefrom. It is evident from the terms of the trust instrument itself that he might never become a beneficiary of the trust to the extent of ever receiving any part of either corpus or income. There was, it is true, the possibility of his becoming such a beneficiary at some indefinite time in the future and the fact that the trust instrument so provided did not make the happening of the contingency upon which he might become such beneficiary any less doubtful or the possibility of such any less remote.
It is, however, contended in behalf of the petitioner that her husband was in fact a beneficiary of the trust she created and was such during*1324 the taxable years in issue, in the sense that he received benefits therefrom, since the insurance policies on his life (which policies he had transferred to her as trustee, reserving, however, "the right to receive personally all disability benefits payable by the insurance companies" under the policies) were kept alive by the premiums thereon being paid by direction of the petitioner from the income of the trust she created. The record, however, shows that neither the trust she created nor the trust he created required that such payment of premiums should be made from the funds or income arising from the trust she created. The payment thereof in the manner made was a voluntary act on her part and whether so made was left by the terms of her trust to her discretion. Furthermore, there is no evidence in the record that he at any time received, or was entitled to receive, any disability benefits from said insurance companies, the premiums on whose policies had been paid out of income of the trust the petitioner created. It is evident from the terms of the trust *395 he created that he might never actually receive any disability benefits from the insurance companies and to*1325 receive such was the only interest or right he had in said policies.
In , we said: "As we read the revenue statute, it has reference to a present beneficiary of a trust, not to one who has only a remote possibility of bocoming a beneficiary in the future." The facts in that case and in the instant case are not identical, but the reasoning in the former is, in our opinion, applicable and controlling in the latter and we are therefore of the opinion that the petitioner's husband is not a beneficiary of the trust she created, within the meaning of the said section of the Revenue Acts of 1924 and 1926, and the trust created by her is revocable, the entire income therefrom being taxable to her, as the respondent determined.
Judgment will be entered for the respondent.